Banks, brokers climb in tandem

AIG names co-chief operating officers

By

NicoleMaestri

NEW YORK (CBS.MW) -- Brokerage stocks and bank stocks pulled into positive territory in trading Wednesday, overcoming investors' initial disappointment with softer-than-expected U.S. economic data to close higher.

Survey data compiled by the Institute for Supply Management showed the manufacturing sector grew in April, but at a slower pace than in March. The April ISM index fell to 53.9 percent from 55.6 percent in March, while Wall Street was looking for a decline to about 55.3 percent, according to a survey conducted by CBS.MarketWatch.com. Read more.

"The overall picture shows growth in manufacturing activity during April and a good beginning for the second quarter," said Norbert Ore, head of the ISM's survey committee.

The probe into stock research practices continues as the Securities and Exchange Commission on Tuesday reportedly requested detailed information from multiple Wall Street firms about their research practices, expanding the investigation well beyond Merrill Lynch.

AIG succession plan?

Early Wednesday, American International Group
AIG, +0.23%
announced that its board elected Martin Sullivan and Edmund Tse as co-chief operating officers.

As well, the insurance giant created a seven-member Office of the Chairman made up of AIG's most senior executives.

"The new management structure ... will help ensure that AIG has the strongest possible organization to carry out our strategies and business plans for the future," said Chairman Maurice Greenberg in a statement.

Greenberg, who will be 77 later this month, has not announced any plans to retire, but the new management structure sheds some light on a possible succession plan.

Shares of Manhattan-based AIG rose 2.2 percent to $70.61.

Picks for any economy

With the shape of the economic recovery uncertain, Merrill Lynch picked financial stocks that it likes in different recovery scenarios.

Capital One Financial
COF, -1.09%
and Household International
HI, +0.78%
are Merrill's top two picks since "both stocks seem likely to have good earnings growth regardless of the environment." Shares of Capital One and Household finished the session down 1 percent.

If the economy picks up, Merrill said American Express
AXP, +0.32%
could do well. "This tends to be the portfolio manager's favorite because it has less credit risk than a pure credit-card company, plus it is big, liquid, and has an excellent brand name," the brokerage said. American Express shares rose 73 cents to $41.74.

Merrill also said it has a "high degree" of confidence in mortgage pass-through specialist Freddie Mac's
FRE, -3.12%
earnings. "Freddie will probably work best in a poor economy, but also do well if the economy remains sluggish." Freddie Mac shares posted a 10 cent gain to close at $65.45.

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